Thousands of savers urged to cash in forgotten bank accounts worth up to £2,200
HMRC is urging newly turned 18-year-olds to check for unclaimed Child Trust Funds (CTFs) potentially worth around £2,212.
The Child Trust Fund is a tax-free savings account set up by the government for children born between 1 September 2002 and 2 January 2011.
At the time, the government contributed at least £250 per account, with children from low-income families receiving an extra £250.
These accounts have been growing with interest and are now worth significant sums, but many remain untouched.
According to the latest figures, nearly £600,000 accounts belonging to 18 to 21 year-olds remain unclaimed.
What is a Child Trust Fund (CTF)?
CTFs are long-term, tax-free savings accounts and were set up for children born between September 1, 2002 and January 2, 2011.
Eligible kids also had the opportunity to set up a child trust fund themselves.
HMRC sent the parents or guardians of qualifying children a starting payment voucher of £250 (or £500 if you were on a low income).
If you didn’t set one up for your child within a year, HMRC would do it automatically.
Anyone can add to the account thereafter, and you can put up to £9,000 a year into it.
The year starts on the child’s birthday and ends the day before their next birthday.
Your child will have full control over the account once they turn 18.
At that point, no more money can be added either.
Until your child withdraws or transfers the money, it stays in an account that no one else has access to.
CTFS were replaced by Junior ISAs in November 2011, so you can’t get one now.
How to find out if you have a Child Trust Fund?
If you think you might have CTF, you can trace it using the government’s online services.
Visit the Online Tracing Service, you’ll need a Government Gateway login and your National Insurance number to get started.
If you’re a parent looking to trace your child’s CTF, you can do so online or by writing to HMRC with these details:
- Full names and addresses for both the parent and the child
- Child’s date of brith
- Child’s National Insurance or Unique Reference Number, if known
What happens after I’ve claimed the money?
Once you’ve claimed your money, there are several options available: You can cash in, by transferring the funds into your bank account.
Consider moving the money into a ISA or Lifetime ISA to continue growing your savings.
A Lifetime ISA allows you to save up to £4,000 a year, with the government adding a 25 per cent bonus when used to buy your first home or for retirement.
Or you could keep the cash invested or save it for a significant expense, like education or travel.
How you can find the best savings rates
If you are trying to find the best savings rate there are websites you can use that can show you the best rates available.
Doing some research on websites such as MoneyFacts and price comparison sites including Compare the Market and Go Compare will quickly show you what’s out there.
These websites let you tailor your searches to an account type that suits you.
There are three types of savings accounts fixed, easy access, and regular saver.
A fixed-rate savings account offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw but it comes with a hefty fee.
An easy-access account does what it says on the tin and usually allow unlimited cash withdrawals.
These accounts do tend to come with lower returns but are a good option if you want the freedom to move your money without being charged a penalty fee.
Lastly is a regular saver account, these accounts generate decent returns but only on the basis that you pay a set amount in each month.